'Metals, oil & gas industries may see job losses this year'

It's not the global economy that has seen a slowdown of sorts. Companies across India Inc, too, are continuing to take a cautious stance. According to the recently­launched 20th edition of the Aon Hewitt Annual Salary Increase Survey, most companies will not opt for aggressive pay increases this year. Attrition in India has fallen most since the 2009 crisis and now stands at 16.3 per cent. In an interview with Swati Verma, Anandorup Ghose, Partner, Aon Hewitt India, reveals that even as rewards continue as a retention tool for top talent, programs around leadership opportunities and coaching, overseas assignments, fasttrack programs for high­potential executives are increasingly gaining ground. He also shares his views on the changing appraisal methods being adopted by Indian companies. Excerpts

Top Indian companies like Infosys, IBM, Accenture India and Microsoft have dropped the traditional "bell ­curve" method to evaluate employees. How do you see this change?
Well, there are two aspects to this. First, this change is being brought about primarily in technology industries. That perhaps is also due to the nature of the industry where this change is happening.

Secondly, we are seeing these changes in organisations which have very strong and matured HR systems and processes. These organisations have very well­tuned performance management frameworks. When you have strong performance management systems for a period of time, your managers, on an average, are better able to evaluate performance. Your processes are stronger to distinguish performance and when that starts happening, you will start gradually seeing the need for normalization persistently. In these big companies, managers have gone through the training to evaluate employees effectively and, hence this change.

According to you, what is the best and worst thing about the bell­curve method?
The good thing that the Bell curve does is it drives a certain degree of uniformity across the organization. So, if you are a particular kind of person you will get a particular kind of result.

The bad thing about it is that it forces managers to rate you in a given set or pattern. If the Bell Curve is adopted in a very strict manner, it forces you to rate only 5 people in grade A, only 10 people in grade B. So, it forces people because there could be a sixth person, too, deserving grade A.

Is junking the Bell curve becoming a fad and will we see the same happening to the new methods of appraisal 5 to 10 years from now?
Yes, you can call it a fad. If it's a fad, it will go away after some time.

Recently, Infosys came up with the iCount appraisal structure to measure the performance of its staff. What could be the merits and demerits of it?
It's the same thing that other organizations are also doing. It's a part of the same transition. I think Infosys has achieved that level of maturity in their management systems where they can move beyond the Bell­-curve evaluation and adopt something which is more holistic. If the company is confident that their manager ­ their unit manager ­ is capable of judging performance effectively, which is not something that many organizations have, it is a good thing for them. That is how I feel about it.

Many companies are adopting real-­time feedback approach for employees after each project. Don't you think it creates too much pressure on the employees to perform extraordinarily every time?
It is difficult for me to comment as I don't know how exactly they are doing it. One needs to have state-­of-­the­-art technology to implement these kinds of feedback systems. I see it differently. It is not only about saying one is good or bad but how one has performed the task, the proper structure.

Given the obvious nature of competition among employees, don't you think it is unfair to implement the 360­-degree evaluation method as the approach takes into account feedback of peers as well?
Not really. There are companies who have been extremely successful through this method. It is a question of maturity. Companies should not implement the 360-­degree of evaluation unless they are very sure that they have taken people through a transformation process.

People should understand why they are doing it. A sudden introduction of the 360­degree of evaluation is certainly a bad idea because people will react exactly the same way as you are saying. Over the time, if managers are able to explain to employees that it is a positive way to improve their performance as well as that of the organization, then it helps a lot. In India, it is still in the initial stage but globally the method is widely accepted and followed.

Observing the trend, one could figure out that mostly IT companies are adopting new ways of measuring their staff's performance. What is the scenario in other industries?
There are knowledge-­based industries and process-­based industries. Knowledge-­based industries, under which the IT companies figure,are the ones where individuals have a larger role to play and the individual's capabilities differentiate business performance.

In the process-­based industries, say chemical manufacturing for instance, the individual's role is simply managing the process. So, in those industries the need of the Bell curve becomes more as it sharply says that one section's performances have exceeded the other.

In service­-based industries, everyone might have done it and then pushing them into an A, B or C is unfair.

In the process-­based industries if the company has not done well you cannot afford to reward staff, whereas, in service-­based industries, if everyone is doing good work why they shouldn't be rewarded? Which sectors are the most vulnerable and run the risk of job losses in 2016?
Industries which are not doing well like cement, metals, oil and gas and some parts of financial services may see job losses this year. They are facing a lot of headwinds.

Are salaries and increments the most important components of employee retention strategies?
We are saying no. To a large extent, people leave organization because of equity pay, role stagnation and career opportunities. Salary is important but to retain talent there is an interesting spin to it. These days, employees are looking for entrepreneurship opportunities, coaching programmes and things alike which allow them to do something different from the regular assigned job. Hence, programs around leadership opportunities are fast gaining prominence.